Intertemporal Sustainability of Fiscal Policies: Some Tests for European Countries
In: European journal of political economy, Band 18, Heft 3, S. 517-528
ISSN: 0176-2680
Fiscal sustainability requires that governments are able to respect the intertemporal budget constraint (IBC) in present value terms. In this paper, we test for sustainability by performing an empirical analysis of cointegration between public expenditures & revenues as ratios of GDP in 11 member states of the EU during the period 1960-2000. If cointegration of expenditures & revenues as ratios of GDP is a sufficient condition for sustainability, our results point to the possibility of sustainable budgetary paths in Austria, France, Germany, Netherlands, & the UK, but not in Belgian, Denmark, Ireland, Portugal, Italy, & Finland. 4 Tables, 17 References. Adapted from the source document.